Toshiba close to HD DVD retreat

Toshiba is preparing to give up on its HD DVD format for high definition DVDs, conceding defeat to the competing Blu-Ray technology backed by rival Sony, a company source said on Saturday. The move could put an end to a battle that has gone on for several years between the two consortia led by Toshiba and Sony, respectively.

Toshiba’s apparent capitulation follows the decision by major US retailer Wal-Mart to stock only Blu-Ray disks in its stores.

The format war, often compared to the Betamax-VHS battle in the 1980s, has confused consumers unsure of which DVD or player to buy, slowing the development what is expected to be a multibillion dollar high definition DVD industry.

A source at Toshiba confirmed an earlier report by public broadcaster NHK that it was getting ready to pull the plug.

“We have entered the final stage of planning to make our exit from the next generation DVD business,” said the source, who asked not to be identified. He added that an official announcement could come as early as next week.

No one answered the phone at Toshiba’s public relations office in Tokyo.

Hollywood studios had initially split their alliances between the two camps, meaning only certain films would play on any one DVD machine.

The balance of power tipped toward the Sony camp in January after Time Warner’s Warner Bros studio said it would only release high-definition DVDs in Blu-ray format. With that, studios behind some three-quarters of DVDs are backing Blu-ray, although some release in both formats. However, Toshiba has secured agreements with studios including NBC Universal’s Universal Pictures, Viacom’s Paramount Pictures and DreamWorks Animation.

In addition to Wal-Mart, consumer electronics chain Best Buy and online video rental company Netflix also recently signed up to the Blu-ray camp.

Wal-mart’s on-staff movie and gaming blogger put the future of HD DVD in stark terms.

“So ... if you bought the HD player like me, I’d retire it to the bedroom, kid’s playroom, or give it to your parents to play their John Wayne standard def movies, and make space for a BD (Blu-ray disc) player for your awesome Hi Def experience,” Wal-Mart blogger Susan Chronister wrote in a posting.

The exclusive backing of Microsoft was also put in doubt when the software giant said in January that it could consider supporting Blu-ray technology for its Xbox 360 video game machine, which currently works only with HD DVD.

Toshiba responded to earlier setbacks by slashing prices of HD DVD players, but Wal-Mart’s move cast doubt on the success of that strategy.

“Where are you going to sell the cheaper high-def format if not at Wal-Mart?” said Stephanie Prange, editor-in-chief at Home Media Magazine, who in January had cautioned against declaring Blu-ray the winner.

“The dominoes are falling pretty quickly .... I think it’s over,” she said, tallying up previous wins for Blu-ray at Target and Blockbuster as well.

Sony has spent large sums of money to promote Blu-ray in tandem with its flat screen TVs and its PlayStation 3 game console, which can play Blu-ray movies.

The Toshiba source said the experience would not be a total loss for the sprawling conglomerate, whose products range from refrigerators to power plants, which would learn valuable lessons. “Marketing was a weak point for Toshiba. We learned a lot from HD DVD. Strengthening marketing will continue to be an issue for us going forward,” the source said.

Image: If Toshiba decides to ditch HD DVD, it will help reduce the confusion in high-definition formats

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